MM 27 November 2020

 Quotes 

Contrarian investing illustrated 

Markets & Macro news

Debasement of the USD is underway

The ECB is trying to keep the Euro in a competitive range (by pushing bund yields lower)

If the Euro continues to appreciate (as it should), what does it mean for the export-led Dax? Elliott Wave has an answer

Correlation of the Bunds with US treasuries is rising again 

If this is your balance sheet, you may as well think of alternative to protect your wealth and purchasing power from the coming debasement

Looking for an alternative retirement plan? Do not forget wine.

Is Gold correction over?

Pierre Lassonde, founder of Franco Nevada and one of the world’s most astute gold investors, thinks so. The thesis is straightforward. Money printing is a giant tailwind, while world gold production is declining and will be so for the next three years. It takes 3 to 7 years to get a permit for gold mining depending on jurisdictions. Lower supply is here to stay. There is 31150.7 ounces in a tonne of gold and the total quantity of gold that was digged out or in known reserves is 244,000 tonnes (of which 187,000 produced and 57,000 in known underground reserves) or 7.845bn ounces. Every year, gold miners produce 2500-3000 t, adding 1-1.5% to the total stock of gold. This production is equivalent to a turnover of USD 144bn for the gold miners. Given the fact that the all-in cost for digging out gold by the gold majors is USD 800/ounce, this suggests global gold miners profits could reach USD 80bn EBIT this year and may explain why Warren Buffet added gold miners to its portfolio. Should we be concerned by the recent fall? Pierre Lassonde thinks not. He believe the entirety of the move was caused by ETFs, which had bought 1000 tonnes earlier this year, thereby offsetting the 50% collapse of jewellery sales from  Asia. As a rule ever 100 tonne of gold buying/selling can move the gold price by USD 30-45 /ounce. If the big ETF sell off is behind post vaccine news, gold should rebound in the coming months and hit new highs in January. Pierre Lassonde’s long term target price is based on a Dow/Gold ratio of 1.1x! So big upside indeed (or big downside for the Dow, depending on how you look at it), but risk parity buffs seem to agree. 

Meanwhile, "digital gold2, Bitcoin, "crashes" after it reached the front page news and hit a DeMark count of 13. Not the first one, not the last one. It comes with the territory.

Themes, Sectors & Corporate news

Politics dominate the thematic and corporate news landscape

Just as Boeing reported no new orders last month and USD 600m of cancelled orders, the airline industry is fighting for survival.

Got renewables?

Covid 19 is the ultimate catalyst for change and acted as a major “time compressor”. Department stores during the Black Friday week despite 50% off deals on Christmas merchandise…Instead ecommerce sales are booming in the US.

The wheel of fortune